BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 429 (Dahle) - Public contracts: preferences: forest products. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 29, 2015 |Policy Vote: N.R. & W. 5 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 429 would establish a bid preference for state contracts for lumber and other solid wood products that are harvested in compliance with the Z'berg-Nejedly Forest Practice Act or verified under a Compliance Offset Protocol for U.S. Forest Projects adopted by the Air Resources Board (ARB). Fiscal Impact: Onetime costs of up to $100,000 to the General Fund for the Department of General Services (DGS) to promulgate regulations that would establish how the bid preference in this bill would interact with other existing bid preferences. Potential legal costs to the General Fund as a result of legal actions challenging DGS's implementation, or lack of implementation, of this bill. Background: Existing law gives bid preferences to specific types of AB 429 (Dahle) Page 1 of ? contractors or for projects in certain areas. Generally, various Government Code sections establish the programs and DGS' State Contracting Manual specifies program parameters and compliance requirements. Proposed Law: This bill would establish a bid preference in state contracts for lumber and other solid wood products that are harvested in compliance with the Z'berg-Nejedly Forest Practice Act or verified under a Compliance Offset Protocol for U.S. Forest Products adopted by the State ARB if price, fitness, and quality are equal and to the extent consistent with federal law. This preference would only apply to a state agency that directly contracts for specified lumber and other wood products. Paper and other types of secondary manufactured goods would not be subject to this bid preference. This bill would also make a number of findings and declarations regarding the importance of forested lands in California both for the environment and the state's economy. Related Legislation: AB 2994 (Frommer) 2004 would have required state agencies to give preference to the purchase of lumber and certain solid wood products harvested from forests in California when price, fitness, an quality are equal. AB 2994 was vetoed and in the veto message of Governor Schwarzenegger stated, "The preferences imposed by this bill could result in costly legal challenges, retaliation by other states and nations, and bid protests from those claiming the preference should be granted and those objecting to it." AB 994 (Parra, 2007) would have established a similar bid preference. AB 994 was ultimately amended into a bill dealing with another topic. AB 199 (Holden, 2013) would have required specified state agencies to purchase agricultural products produced in California if certain criteria are met. AB 199 was vetoed by Governor Brown. AB 429 (Dahle) Page 2 of ? Staff Comments: The author has committed to delete the provision of the bill that would give a bid preference to lumber and solid wood products that are harvested in a Compliance Offset Protocol for US Forest Products adopted by the ARB or any other offset protocol linked by the ARB. As this provision will be removed by author's request should this bill move forward, this analysis does not analyze any potential costs associated with that provision. To implement this bill, DGS anticipates that it would need to develop regulations to determine how this bid preference would interact with existing bid preferences. For example, the regulations would address how a bid from an out-of-state business owned by a disabled veteran would be ranked against a bid from an in-state business for lumber harvested in compliance with the Forest Practice Act. DGS estimates that developing the necessary regulations would likely cost no more than $100,000 for one year. This bill would require the suppliers to self-certify that the wood products are harvest in compliance with the Forest Practices Act. Staff notes that compliance with the Forest Practices Act may be fairly easy to verify for the purpose of investigating the accuracy of the self-certification. However should the bill be expanded to give preference to lumber that meets other criteria, DGS may have costs associated with investigating the accuracy of the self-certification either because of a complaint or to ensure program integrity. Staff notes that this bill only creates a bid preference "to the extent consistent with federal law." This provision was added in recognition that such a bid preference could be challenged as violating the Commerce Clause in the US Constitution which establishes the exclusive federal authority to regulate commerce with foreign nations and among the states. It is unclear who would make the determination on whether the bid preference is consistent with federal law. Staff notes that it is reasonable to assume that DGS would likely face legal challenges either from those who think that the bid preference is legal and those AB 429 (Dahle) Page 3 of ? who think that it is unconstitutional, depending on whether DGS implements the preference. These legal costs are unknown. Proposed Author Amendments: The author proposes to delete reference to the Compliance Offset Protocol adopted by the ARB on page 4 lines 17-23. -- END --